It is not often we are given guarantees; but we are with pension annuities. Whatever type of variation of a straightforward pension annuity, you get a guaranteed annuity rate. You know exactly where you stand, whether it’s a conventional annuity, an impaired life annuity, an enhanced annuity, a single life annuity, or a joint life annuity with spouse’s benefits. You get the idea.

However, take a with profits annuity, an income drawdown contract, or one of the new variable annuities where you have to rely on investment performance, then there has to be a big question mark with the current market volatility. You have to rely too much on the investment element of the contract for the whole thing to work to your advantage.

So go on, treat yourself to a guaranteed annuity rate. Rates are pretty good at the moment.

The easy answer to this headline is ‘yes’. You want your pension annuity to give you a healthy income in retirement. You want the best annuity rates leading to the best annuity quote, and you are bothering to shop around.

Excellent, but do you know enough about the various factors involved to make a decision yourself? Would you be better off talking through your situation with a specialist?

Examples: Should you take all your tax-free cash (maximum 25%) ?

Should you have a single life or a joint life annuity?

Do you smoke, or have a lifestyle or medical condition?

Do you want your annuity to increase in payment?

Do you want some form of guarantee, so that your pension money isn’t lost on early death?

Do you want a conventional annuity, a with-profits annuity, an enhanced annuity, or a flexible annuity?

Do you know enough yourself not to take advice?

Arriving at an annuity rate to apply to your pension fund at retirement to calculate your important post-retirement income is complex. Look at the various components: an interest rate, inflation, longevity, complex internal calculations. The result…a recipe for confusion. And, don’t forget, if you get it wrong it could cost you tens of thousands of pounds over time.

That’s not all; what type of annuity do you go for: a with-profits annuity, a flexible annuity, a conventional annuity, or an enhanced annuity ? To make it worse you have got to think carefully about taking a joint-life annuity rather than a single-life annuity. That way, a married man, upon death, can see an income continuing to be paid to his surviving wife. If that married man simply took a single-life annuity by mistake, then his wife would be left with no pension income.

All this does make the whole issue of buying your annuity at retirement a complex matter. The solution…seek advice from an independent financial adviser; use the service available via this website www.rightannuity.co.uk .